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Earnings Season

5 Picks Analysts Say Are Their Favorite Stocks Now

5 Picks Analysts Say Are Their Favorite Stocks Now

Analysts are bullish on these 5 stocks post-earnings.

Earnings season is wrapping up and it has been a wild one.

The bad news: companies’ average earnings per share are down 36% from their 2019 level, the largest year-over-year decline since the financial crisis in 2008.

The good news: results haven’t been as bad as Wall Street analysts had feared given they expected a 44% decline.

Despite this good news, the market’s reaction has been moderate and mixed, according to RBC’s head of U.S. equity strategy, Lori Calvasina. Still, analysts are now looking ahead and reviewing their short-term and long-term takes on their favorite stocks.

First up is Carvana (NYSE: CVNA).

Carvana shares are up 110% so far this year, and jumped 28% on August 6 following the used car dealer’s second quarter earnings report.

The e-commerce platform for buying and selling used cars posted a 25% year-over-year increase in units sold, and a 13% year-over-year increase in revenue to $1.118 billion in the quarter.

After Carvana’s earnings, Wells Fargo analyst Zachary Fadem boosted his price target on the stock from $175 to $200, saying that the company is a disruptor in the used vehicle retail market given its customer-friendly and asset-light business model.

“Market expansion, gross profit improvement, and consumer adoption drive our Overweight view,” Fadem wrote in a note. “Considering a large ($800B+) and fragmented industry, post-coronavirus proof points and sub-1% online penetration (that could easily go to ~10%), we view CVNA one of the few must own, multi-year growth stories in all of Consumer.”

BTIG analyst Ryan Zimmerman has his eye on medical device company Globus Medical (NYSE: GMED). 

Zimmerman reiterated his Buy rating on Globus Medical shares earlier this month, and boosted his price target form $58 to $63 – indicating 14% upside from here. 

“Given GMED is one of only a few MedTech companies growing Y/Y and generating positive FCF, we think the risk/reward continues to favor the upside,” Zimmerman said in a note. 

Globus Medical posted a strong top-line bear with revenue of $148.9 million, higher than Wall Street estimates for revenue at $103.6 million. 

The medical device maker’s shares are still depressed following the coronavirus pandemic market sell-off, which pushed the stock down 42% between mid-February and mid-March. Zimmerman says that “investors have an opportunity to step into shares at current levels and purchase a company growing at multiples of the spine market, while receiving burgeoning programs such as robotics and trauma essentially for free.”

Zimmerman also argues that Globus Medical offers investors with a long-term horizon a diversified musculoskeletal asset with above-peer margins and a strong balance sheet.

Rosenblatt analyst Kevin Cassidy is bullish on Synaptics (NASDAQ: SYNA), given that it is “well positioned for profitable growth.”

Cassidy recently boosted his price target on the stock from $86 to $95 – nearly 11% higher than the current share price. 

“We believe the IoT product group’s strategy is playing out very well and will be the longer-term growth driver for the company,” Cassidy wrote in a note, adding that the IoT group’s gross margin could expand from 54% to nearly 60% over the next few years.

The new stay-at-home economy amid the pandemic has driven demand for smart speakers, sound bars, headsets, and smart displays, according to Cassidy. And the analyst notes that Synaptics’ next quarter guidance includes two months of newly acquired IoT product revenue of around $30 million and non-GAAP earnings per share of roughly $0.20.

Given that sales and cost synergies are improving, Cassidy said, “initial estimates for $160mn of annual revenue and $1.50 of annual non-GAAP EPS may prove conservative.”

RBC’s Mark Mahaney rates GoDaddy (NYSE: GDDY) a Buy and boosted his price target on the stock this month from $93 o $98 – 22% higher than the price as of this writing.

“GoDaddy is joining a limited list of companies that are seeing higher demand during this crisis as businesses and organizations experience the real need for digital presence solutions,” Mahaney said.

And finally, JPMorgan analyst Cory Kasimov likes bluebird bio (NASDAQ: BLUE).

Kasimov recently reiterated his Buy rating on bluebird bio shares and raised his price target on the stock to $140 – indicating a possible gain of 130% over the next twelve months. 

“In our view, BLUE, with its gene and cell therapy platform, is one of the more potentially transformative and disruptive companies we’ve come across in some time,” Kasimov wrote in a note to clients.

Kasimov is now looking ahead for clinical updates and regulatory feedback over the next year that could “serve to better inform the future potential” of bluebird’s products. 

Bluebird discussed at its recent earnings report the re-submission of ide-cel (for multiple myeloma) and compelling HGB-206 sickle cell disease data.

And according to Kasimov, bluebird is on-track to launch its Zynteglo in the EU in the second half of this year, with additional HGB-206 data and Marketing Authorization Application filing for eli-cel by the end of this year. 

“Overall, we remain encouraged by bluebird’s progress across multiple clinical programs involving its potentially transformative gene therapy and CAR-T platforms (not to mention shored up balance sheet),” Kasimov concluded.

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